AI has created the fastest-scaling companies we’ve ever seen. Lovable, for instance, hit $100 million ARR just eight months after launch. As Brian Balfour observes in The Big Squeeze, “Escape velocity elevated Lovable from obscurity to household name. And now the company has a real chance to build a large and successful business. But there’s no guarantee they’ve found long-term defensibility or can turn this wave of interest into a sustainable business.”
That tension—between speed and defensibility—is the defining challenge of today’s market. Startups can achieve breakout growth only to find incumbents copying their innovation and distribution channels drying up. For B2B startups, the squeeze is even harsher. Distribution windows are shorter, incumbents are stickier, and the path to defensibility is narrower. Winning requires not just speed, but turning that speed into structural moats.
The Mechanics of the Big Squeeze
Balfour describes three converging forces:
- Massive AI interest: fueling rapid adoption and record-breaking growth.
- Incumbent mirroring: big players rushing to replicate startup innovations.
- Distribution scarcity: organic channels like search and social in steep decline.
The result, he writes, is
The Big Squeeze. Startups must get massive distribution quickly, but it’s harder to get and easier for their innovations to be ripped off once they do.
This dynamic was captured years earlier by Alex Rampell of Andreessen Horowitz:
The battle between every startup and incumbent comes down to whether the startup gets distribution before the incumbent gets innovation.
In B2B, where distribution has always been more constrained, the battle is even tougher.
Why Distribution Alone Isn’t a Moat
Balfour is clear: “Distribution isn’t success in itself, but an opportunity to capture it. It’s the very first step in building a moat.” [...]